Outcome I

Print

 


OUTCOME I: Legal, policy, regulatory and institutional frameworks that facilitate revenue generation, revenue retention and other aspects of sustainable PA financing and management are established and functional

The existing governance framework, including legal, regulatory and institutional components, provides inadequate support to sustainable PA financing. Overall, legal, regulatory and institutional frameworks are failing to provide an adequate enabling environment for sustainable PA financing. Therefore, Egypt's PA financing systems need to be substantially revised to enable efficient and appropriate financial and management planning and improve revenue generation by NCS and retention and disbursement to PAs, while barriers preventing potentially useful legal reforms will be addressed. During the preparatory phase of this project, it was estimated and agreed that an equivalent sum of $ 13.8 million of revenues generated by PAs will be directly available as cash co-financing, which will represent an important step to firmly establish the principle of re-injection of revenues to NCS. It will also represent necessary steps towards financial stability of PAs. This will require a Ministerial Decree which will lay the foundation for sustainable PA financing by promulgating urgent changes needed to provide regulatory streamlining and flexibility for NCS financial needs in order to perform professionally.

The Ministerial Decree is expected to be an essential step in including the following positive changes:

  1. a substantial increase in revenues generated by the system
  2. the re-injection of a major portion of revenues generated by Egypts PAs for management and expansion of PA system
  3. the step-wise closure of PA system financing gaps
  4. major reductions in the long-term cost to Egypt's state budget of establishing and maintaining a financially and ecologically sustainable system of PAs
  5. enhanced conservation effectiveness at PAs and
  6. establishment of PA management as an appealing career for qualified and dedicated professionals.

 

While the Ministerial Decree will thus establish a broad policy framework for sustainable PA financing, this framework will require a set of detailed policy and regulatory measures to become effective in practice and to institutionalize a new approach to sustainable PA financing and management. For example, governance structures including developed and other partnership arrangements, will enable and require the use of effective, transparent mechanisms for allocation, management and accounting of revenues and expenditures. At the project's end, an effective set of institutional responsibilities will be in place, along with a comprehensive enabling policy and regulatory environment.

Output 1.1. Economic valuation of protected area systems (ecosystem services, tourism-based employment, etc) are conducted.

All countries have an interest and a responsibility in understanding the importance of their country's natural assets – its lands, coasts and marine areas, inland water and wetlands, biodiversity, species, ecosystems in which they live and their genes. This is the natural capital that provides a country its economy and its people with a flow of goods and services that are fundamentally important for prosperity, livelihoods, and well-being. The value we receive from our natural capital are immense. Globally speaking, economic values of biodiversity and ecosystem services, across all biomes, have been estimated to be over $ 34 trillion annually. Therefore, failure to adequately take their values into account in our decisions exposes us to the risk of loosing yet more of it. We need to recognize the need to understand what these flows of value are and how to work with nature to maintain these ecosystem services that come from the stock of natural capital – the productivity of fisheries, soils, water quality and supply, carbon storage and natural hazards mitigation, as well as the cultural, spiritual and tourism values of natural assets. We also need to understand the dynamic relationship between people, economy and natural systems better and take account of these insights in decision – at the policy level, and at business and citizen levels. Working with nature offers the potential to achieve many of our objectives cost-effectively, offers significant saving, and promises many policy synergies, notably with climate change, water security, poverty eradication, and in general improving human well-being. It also provides an opportunity for innovation and for a transition to a sustainable green economy, mindful of nature's resources and ecosystem levels, and respecting the rights and dreams of the present and future generations.

Economic valuation of PAs should address 3 important issues: Terms, Analytical Stages, and Identification of Benefits: 
Terms (what is being valued): Some ecologists use the old joke to describe an economist as one who knows the price of everything but the value of nothing. Economic valuation derives from the changes that ecosystem services make to human well-being. It has to be in the context of benefits that are already (or will be) available to individuals. Thus, what is being valued is neither the ecosystem per se nor the services but rather the benefits provided by them. This does not mean that ecosystems and their services are not valuable, but there is a difference between being valuable and being valued.

Analytical Stages: As emphasized by many economists, the identification of non-marked gaps comes first then valuations are carried out where possible. In doing so, the following steps can be distinguished: 1) choice of the appropriate assessment approach (impact / damage analysis, partial valuation, total valuation); 2) definition and specification of the spatial system boundary of the ecosystem; 3) identification of the services of the ecosystem and potential benefits provided by them; 4) assessment of their actual provision level (including quality), and what effect there would be if the ecosystems were removed; 5) identification of the groups of people in society who benefit from them (or will be suffering loss when they are removed, destroyed or degraded); 6) identification of the possible values attributed to them by these different groups in society; and 7) selection of the appropriate economic valuation techniques (e.g. stated preference methods, revealed preference methods, and cost-based methods).

Identification of benefits: The first step in defining ecosystem services is to identify their benefits to people, then to know where and when these benefits arise. For example, coral reefs provide a wide range of services with valuable benefits to humanity as a means of life support and quality of life enhancements. They are a source of food, medicine, protection, employment, leisure, and fascination.

Based on the above, NCS does not have yet an economic case to prove the current benefits of PA's system to the Egyptian society, and ecosystem services provided by PAs. However, preliminary studies on some PAs in Egypt were made, and have shown immense values. For example, Lake Burullus PA (typical of wetlands) produces goods and services (capture fisheries, aquaculture, agriculture and animal husbandry) worth more than $ 300 million annually. At the species level, individual shark value was estimated at $ 200 000, dolphin at $ 500 000 and dugong more than $ 1 million annually. These estimates were based on only one factor, tourist travel cost. Economic recreation value of coral reefs at Ras Mohamed National Park varied between $ 141 to 190 million, depending on individual nationalities. Mangrove ecosystem services, also at Ras Moahmed, were estimated at $ 200 000/ha/yr. In a recent study during the preparatory phase of this project, it was shown that investing one dollar at Wadi Gemal National Park will contribute to the national local economy by more than $ 50/yr. Such information will enable NCS to build a strong case to elevate PA’s profile in public and private spheres.

Therefore, NCS will receive technical support to conduct a system – level economic valuation of the benefits of the PA system in terms of poverty alleviation, tourism development, employment creation, etc. This will be achieved by Egyptian experts who have obtained experience and qualifications (M.Sc and Ph.D) recently on the economics of PAs, with assistance given by foreign experts who have participated in the preparatory phase of the project.

During the first year of this project, emphasis will be given to the general strategic economic valuations of ecosystem services with focus on different 3 PA’s ecosystem goods and services representing marine (Ras Mohamed), wetlands, and desert ecosystems (Wadi El-Gemal and Wadi El-Rayan). Later on, 5 more PAs will be evaluated economically, and by the end of the project, managers of PAs and their staff will be able to value the economics of all PAs in Egypt, and their contribution to national and local economy. It is hoped that such studies will convince Government to consider PA’s economics in the national accounting system.

Output 1.2. National PA financing policies and strategies developed. PA financial sustainability is the ability to secure stable and sufficient long-term financial resources, and to allocate them in a timely manner and appropriate form, to cover the full costs of PAs (direct and indirect) and to ensure that PAs are managed effectively and efficiently with respect to conservation and other objectives.

  • become more responsive to changing opportunities and external demands
  • strengthen institutional capacity to use financial and business planning tools
  • establish more supportive economic policy and market conditions
  • involve a wider range of stakeholders in PA management.
Elements of PA financial sustainability are:
  • Building a diverse, stable and secure funding portfolio (minimizing funding risks and fluctuations (e.g. tourism is the main funding);
  • Improving financial administration and effectiveness (allocation / spending of funding);
  • Taking a comprehensive view of costs and benefits;
  • Creating an enabling financial and economic framework (overcoming market and pricing policies that act as obstacles to PA financing);
  • Mainstreaming and building capacity to use financial tools and mechanisms (PA planning).

Major challenges to PA financial sustainability include: failure of international institutions and national governments to honor their commitments to biodiversity conservation, changing public policy priorities and growing public budget constraints, economic incentives, social costs of PAs, co-management of PAs by locals and private sectors, lack of scientific bases for determining sustainable use of PA resources, appropriate fees, royalties and other changes.

Therefore, national environmental agencies should work with the financial and economic agencies to ensure that policies, markets and prices in other sectors do not undermine PA financial sustainability.

PA authorities should construct financial portfolios incorporating a diversity of funding sources and a multiplicity of beneficiaries. They should also take advantage of new opportunities for raising finance (e.g. new innovative financing mechanisms, new markets for PA goods and services; willingness to pay).

PA authorities should view funding as part of broader management requirements (financial planning to reduce costs, effective management). They must recognize and respond to the broader sustainable development goals of the government and other groups that fund them.(e.g. poverty reduction should be part of PA management objectives).

Different studies have estimated the financial gap of PA’s around the world. The current financing in developing countries is around US $ 800 million, about 25% of the total required (only 16% of basic needs financed in Egypt) as the national government budget is the main source of funding for PAs. Mobilizing adequate resources will require a much broader spectrum of financing mechanisms, particularly market-based mechanisms. For example, tourism and recreation are highly valued PA benefits, reaching up to 80% of the annual expenses for National Parks in South Africa. However, tourism is a very competitive industry, and faces many challenges. Therefore, alternative sources of funding need to be explored.

Considerable increase can be generated through direct charges. Examples of these funding sources include entrance fees, licenses or permits for recreational activities (trekking, fishing, camping) as well as indirect charges on souvenirs, hotel accommodation, airport tax, and others. However, legal limitations to PA financial autonomy (such as setting fees or keeping revenues) are common, and although many PA’s may have infrastructure and staff required to collect fees from visitors, the laws in some countries like Egypt do not allow keeping revenues at PAs, but resources generated are transferred to governmental central accounts (EPF) and do not return to the PA’s system.

Recent studies in Egypt during the preparatory phase of this project have shown that national PA financing strategies can help in establishing spending priorities, defining policies related to revenue generation and retention, clarifying institutional lines of responsibility, defining instruments such as Trust Funds, and establishing incentive structures and tools such as business planning.

Egypt has a biodiversity strategy and Action Plan (1997 – 2017) covering the PA system as a whole, but no explicit policy or strategy for sustainable PA financing. However, there is a clear indication that NCS considers sustainable finance to be a top priority. There is also strong political well within NCS to make progress towards sustainable financing. Barriers include: (1) NCS enthusiasm is not accompanied by a commensurate level of relevant technical skills and practical tools. (2) There is an overall absence of a planning culture: plans are either not properly formulated, implemented monitored / evaluated or adapted to changing circumstances. (3) No formal procedures or policy ensures that resource allocation criteria are fully implemented, leaving too much room for discretional allocations. (4) Non-explicit policies and informal agreements guide activities and decisions regarding sustainable finance.

NCS will develop and gain Government buy-in, support and approval for a national PA financing strategy, including targets, policies, tools and approaches. In particular, the following will be prepared: (1) a system-level financial needs assessment which will be used to update and fine-tune existing basic and optional funding scenarios, and (ii) a system-level business plan providing targets and strategies for achieving these scenarios. These documents will incorporate, inter alia, plans for expanding the PA system in order to ensure that funding is available for land tenure studies, legal fees and other costs associated with legal establishment of new PAs, as well as for subsequent management costs. Overall, the strategy will provide a technical and political framework for business planning and a financial sustainability strategy. This process will help to promote a stronger constituency to ensure that the government meets past, current and future commitments. This will be achieved through field work at the three selected PAs (first stage), then expanded at the other PAs and the system level (NCS). It will require both national and international consultants that have been involved in the preparatory phase of this project.

Output 1.3. Effective and efficient institutional responsibilities for financial management of PAs established.

Natural resources of PAs are considered by many organizations and individuals as “common property” where they have the right to benefit directly without paying for the cost of PA management. This view has led to activities resulting in degradation of biodiversity which is the main asset for sustainable economic and social considerations. In addition, the current enabling environment for sustainable PA financing is inadequate as the existing governance structure, including legal, regulatory and institutional components, is failing to provide enough support to PA system, and there are still many key barriers to sustainable PA financing.

Sustainable PA finance requires supportive policy and market conditions. It also requires support from a wide range of actors. One of the project’s aims is to ensure that there will be long-term involvement in decision making and implementation. This will be encouraged through support of the development of effective and efficient co-management models in selected PAs.

A collaborative management approach, in which some or all of the relevant stakeholders (governmental, non-governmental) are involved in substantial activities, is proposed by this project.

Building PA capacity for financial and business planning is essential. NCS has to develop partnerships with relevant stakeholders and specify and guarantee their functions, rights and responsibilities. In general, the partnership should identify:

  • The range of sustainable uses PAs can provide
  • The functions and responsibilities assumed by each stakeholder
  • The specific benefits and rights granted to each stakeholder
  • An agreed set of management priorities and management plan
  • Procedures for dealing with conflicts and negotiating collective decisions about all of the above
  • Procedures for enforcing such decisions
  • Specific rules for monitoring, evaluating and reviewing the partnership agreement, and the relative management plan, as appropriate.

 

The approaches to establishing partnerships for improving the management of protected areas are built on the following 10 principles:

  1. Providing benefits to local people;
  2. Meeting local needs;
  3. Planning holistically (management of PA’s and that of adjacent areas must be planned together);
  4. Planning protected areas as a system;
  5. Defining objectives for management;
  6. Planning site management individually;
  7. Managing adaptively;
  8. Fostering scientific research;
  9. Forming networks of supporting institutions;
  10. Building public support.

 

During the preparatory phase of this project, the stakeholder participation plan has been developed based on the following principles:

Principle Stakeholder participation will:
Value Adding be an essential means of adding value to the project
Inclusivity include all relevant stakeholders
Accessibility and Access be accessible and promote access to the process
Transparency be based on transparency and fair access to information
Fairness ensure that all stakeholders are treated in a fair and unbiased way
Accountability be based on a commitment to accountability by all stakeholders
Constructive Seek to manage conflict and promote the public interest
Redressing Seek to redress inequity and injustice
Capacitating Seek to develop the capacity of all stakeholders
Flexible be flexibly designed and implemented
Rational and Coordinated be rationally planned and coordinated, and not be ad hoc
Excellence be subject to ongoing reflection and improvement

The three main procedures that protected area institutions can follow for building partnerships are:

  1. Identify the key protected area interests of various groups (potential range of products and services that can be used by some groups without diminishing these of others).
  2. Recognize priority of concerns for local communities (how protected area management can help meet local needs).
  3. Stimulate informed advocacy (take account interests of various groups in the political and financial decisions, reinforce the support of interested groups, structure education and information programs).

 

This proposed model for partnerships will contribute to better coordination and collaboration between the authorities responsible for conservation (NCS) and sustainable development. It will be more effective in resolving management problems, and avoid duplication of efforts in and around the PAs. The efforts of various stakeholders in areas such as conservation, development, education and awareness, research, etc. will be coordinated and oriented towards common goals.

The project will also provide the following opportunities for long-term participation of all stakeholders, with a special emphasis on the active participation of local communities:

Decision-making – through the establishment of the Project Management Unit and the associated Project Board. The establishment of the structure will follow a participatory and transparent process.

Capacity building – at systemic, institutional and individual levels – is one of the key strategic interventions of the project and will target all stakeholders that have the potential to be involved in brokering, implementing and/or monitoring management agreements related to activities in and around the selected sites. The project will target especially organizations operating at the community level to enable them to actively participate in developing and implementing management agreements.

Communication - the project will be launched by a well-publicized multi-stakeholder inception workshop. This workshop will provide an opportunity to provide all stakeholders with updated information on the project as well as a basis for further consultation during the project’s implementation, and will refine and confirm the work plan.

This input will require continuous consultations with all relevant stakeholders; improving inter-sectoral information exchange and coordination at local levels in selected PAs; developing policies, procedures and inter-institutional agreements to operate resource generating mechanisms and associated investment decisions; developing a policy and procedures of negotiating, evaluating and monitoring concessions. Evaluating concessions will be based on the type of activity, duration cost-benefit, and capital recovery, and benefit sharing. Monitoring concessions will be based on PA needs and opportunities which will continue to grow and change. Thus, PA sustainable finance will not be just a demand but also will be an obligation by each stakeholder.

Technical support, by both international and national consultants, will be provided to NCS to establish effective and efficient institutional responsibilities for financial management of PAs. After successful consultation with all stakeholders, policies and procedures developed to operate resource generating mechanisms, will be tested in selected PAs.

Output 1.4. Improved governmental budgeting and allocation of funds for PA systems.

When the National Biodiversity Strategy and Action Plan (NBSAP) were approved in 1998, they were sent to the Ministries of Finance and Planning. Accordingly, Government budget for PA’s was granted annually. However, the current PA finance system is not adequate in terms of magnitude and predictability. Direct budgetary allocations are estimated, during the preparatory phase of the project, at less than 20% of “basic” financing needs. This is expected to decrease in the future with rapid economic development leading to increased severe pressure on biodiversity. Predictability and timing are further problems; it can take several months to start spending direct governmental allocations as well as EPF resources. As a result, not all available resources are expended (only 64% during the preparatory phase of the project). Other problems include changes in expenditure priorities and lengthy processes hampering agreements for resource allocation, leading to the loss of funds for NCS. Specific barriers include

  1. Many PAs have neither a management plan nor a detailed needs assessment, leaving a large space for resource allocation in many cases to issues of lower priority to PAs.
  2. There is no formal procedure for budgeting involving different levels at NCS.
  3. The financial system does not facilitate expenditure.

 

In recent years, the government decided to allocate resources based on projects and management plans. However, this decision failed to be implemented due to the limited capacity building for EEAA, NCS and PA’s on budgetary efficient disbursement, linked to PA management plan.

There is also a risk that the increasing importance of revenue generation and retention may lead Government to reduce its annual budgetary allocation to NCS. Therefore, the project will work to maintain current levels of central Government allocation while enhancing the efficiency with which such allocations are requested and disbursed. Spending requests will be more carefully defined and linked to management plans. In addition, improved administrative procedures will be developed to facilitate higher levels of disbursement of allocated budget. Finally, agreement will be sought for continued central Government funding of basic recurrent costs over a 10 year period, regardless of changes in levels of revenue generation and retention. Technical support will be provided to NCS to assist in reviewing and assessing current PAs government budgeting system, allocation, disbursement, and procedures.

Output 1.5. Improve policy and regulatory environment for revenue generation by PAs

It seems not a difficult task laying out options for biodiversity and ecosystem services, by highlighting the need for potential synergies not only between financing mechanisms, but also between financing sources earmarked for development, climate change and biodiversity. To understand and evaluate the range of options for financing biodiversity, it is essential to compare existing and future options within the frameworks of revenue generation, delivery and institutional arrangements. This can be achieved by applying a set of common criteria for each framework, derived from core principles that have emerged recently within the biodiversity negotiations.

The following 6 criteria are being used for revenue generation: scale, timeframe, level, market, contributor, and value. Regarding scale (how much money will be raised?), an essential requirement of any revenue generation mechanism is its ability to deliver adequate financing for biodiversity. The question of how much finance will be raised is closely related to when that money will become available and how predictable the source of finance will be. The scale criteria will use a numeric value (in million of $) representing an annual flow of finance by the end of the project. The scale will be a range from a low end estimate (which assumes some policy intervention) to a high end value (with significant policy intervention).

The timeframe criterion describes the period when financing from a mechanism is likely to be available. Financial resources can be generated in either short, medium, or long-term. Certain activities such as capacity building and demonstration projects will require finance in the short-term (e.g. the first two years of the project), whereas other actions such as the implementation of a fully integrated biodiversity market will take longer to achieve. The level criterion describes whether revenue will be generated by a mechanism that is implemented by private sector or government. Private finance can use voluntary mechanisms (e.g. green commodities) or can be driven by national or international regulations. The key to private finance is that the finance raised does not enter the hands of the public sector.

The market criterion refers to the type of market that the mechanism uses to generate revenues. Options include: direct mechanisms for provision of an ecosystem service or biodiversity, linked (tangibly linking the value of biodiversity to more traditional markets, creating indirect market for ecosystem services such as green commodities), other market (non tangible, less feasible, complete with other sectors), and non-market options (charity, international aid).

The payer criterion indicates whether finance is generated from the beneficiary of biodiversity or the polluter that degrades them.

The value criterion indicates whether finance is generated for use or for some other (non-use) reason. Mechanisms based on use value raise finance from actors that will directly use the ecosystem they are paying for or as compensation for the degradation of an ecosystem. Mechanisms based on non-use values raise finance primarily from motivations that are not derived from the use of an ecosystem (e.g. charity). In reality, finance will have a mix of motivating reasons, but mechanisms are categorized based on the primary motivation.

Conventional sources of PA funding will not be sufficient to maintain and expand PA networks in the future, or to meet the growing demands placed on them. In order to meet this challenge, there is an urgent need to develop and expand the innovative PA financing mechanisms to help stimulate broader improvement in PA management and sustainability. These include fiscal and financial instruments used in other sectors of the economy (e.g. taxes, subsidies, credit schemes, devaluation of cost and benefit-sharing mechanisms for PA management and facilities), adoption of incentive-based approaches used to guide broader development processes (e.g. developing new markets for PA goals and services, payment for ecosystem services, willingness to pay methods and others).

The project will prepare and gain approval for a new policy framework and set of rationalized procedures by which appropriate new revenue generation mechanisms are designed (e.g. new user fees, improved concessions procedures, public and private partnership, etc). The project will also seek Governmental approval for the new policy. This will require implementing awareness raising programs targeting decision-makers, private sector operators, about sustainable financing and associated economic concepts. Once approved, the revenue generation policy and regulatory procedures will be tested and assessed through stakeholder support for PA revenue generation schemes.

Output 1.6. Improved policy and regulatory environment support for revenue retention and sharing within the PA system.

An important question that needs consideration is how to govern and coordinate financing biodiversity? The institutional arrangements framework involves four criteria: Institutions (will new institutions be required?) Coherence (will there be consolidation or fragmentation of funding streams), Devolution (who will make spending decisions?) and Approval (who will approve funding?) These criteria allow us to compare individual proposals and see areas of convergence or divergence. They are related to the decision-making process to reduce inevitable overlap within the overall financial mechanism.

The first criterion for institutional arrangements describes how existing institutions will play a role in a future financial mechanism. The current institutions and financing channels are not designed to deal with the scale of financing that is required to meet the objectives of the CBD. This situation leads to possible alternatives: either create new institutions or reform existing ones. In Egypt’s case, there is one functional Environmental Protection Fund, stemming from Law 4/1994, which was amended by Law 9 for 2009. The Protected Area Fund, based on Law 102/1993, was never operationalized. The decision to reform existing institutions or to create new ones is not binary. Both scenarios will require transition periods and some degree of both is likely required.

The second criterion (coherence) is to what extent there will be consolidation of different revenue generation streams. Consolidation through a single entity will facilitate coordination, distribution of different funds, and is easy to monitor. A fragmented system would involve no aggregation of finances and recipients would face a multitude of discrete and uncoordinated funding streams, leading to complex and competing centers, duplication of funding efforts, as well as difficulties in monitoring, reporting and verifying the flow of finance.

The third criterion (devolution) is the choice of where and how decisions are made on the delivery of finances and who made them. In general, spending decisions can either be made by recipients of finance (devolved) or by donors (retained). The devolution of funding decisions is vital in ensuring community-level ownership of action to conserve biodiversity and ensure ecosystem service provision. On the other hand, the current financial architecture, with a few exceptions, uses a retained model in which decisions on how finance is delivered are made by donors. Some funding models will require more or less devolution than others in the delivery of finance.

The final criterion (approval) describes who will approve funding and activities. Decision-making can either be centralized or decentralized. The current model for financing is mostly decentralized where revenues generated are retained. The centralized approach in revenue generation decisions is under the environmental authority where funds are legally separate entities from the national government. It is desirable for certain types of capacity building and technology – transfer activities.

There are four options for the institutional arrangement of finance for biodiversity and ecosystem. These are: conservation trust funds (endorsements, sinking and revolving funds), clearing house (institutional arrangements to bring together buyers and sellers for biodiversity services), exchange market (credit-based to link buyers and sellers of biodiversity services), fragmented and decentralized. Each option will be analyzed using the framework of the four criteria used for institutional arrangement.

During the preparatory phase of the project, it was found that less than 20% of revenues generated by NCS were re-injected in PAs, and as a result, PAs were under funded, leading to degradation of biodiversity resources. Priorities were given to other sectors of EEAA, rather than to NCS which needs more resources to maintain and manage PAs. With the increase in revenue generation proposed by this project, it is likely that NCS and PAs will still not be able to meet their basic and optimum financial needs. Therefore a key step to resolve this issue will be a Ministerial Decree which allows NCS to retain a majority of the revenues generated through user fees, concessions and selected fiscal instruments.

The Decree will also give specific approval to the idea of revenue sharing “solidarity” among protected areas. Under this output, the specific details of revenue sharing will be elaborated. Key principles expected to guide the arrangement include: (i) funds will be available across sites according to a “solidarity” principle, rather than being retained at site level; (ii) revenue allocation formulae will reflect sites’ success in generating revenues, in order to retain site level incentives; (iii) management performance will be among the criteria for budgetary allocations; (iv) a proportion of revenues, as appropriate, may under certain circumstances be made available to support sustainable, biodiversity-friendly development efforts of local communities.

The revenue sharing system to be developed will aim to ensure that PA managers as well as stakeholders who may be paying into the system, remain incentivized by the fact that a significant portion of locally generated revenues are being made available for PA management.

Output 1.7. Improved legal, policy and regulatory environment for alternative institutional arrangements, including concession and other partnerships.

Efforts to enhance PA funding should capitalize on the growing diversity of funding sources. Authorities should seek to mobilize increased sources from (and to) private sectors and local communities through commercial and extra-budget channels.

The current main source of revenues are entrance fees to PAs, concessions incomes, and costs of environmental damages caused by law violations. These are very low compared with the basic needs for PA management. In addition, the value of revenues has not changed for almost two decades (e.g. entrance fees, concessions, etc). Furthermore, there is no scientific basis for valuating entrance fees based on the economics of PAs. The same is true for concessions, which are dealt with at the central level where the concession committee (chaired by CEO, and members of NCS, EPF, and legal department) does not have specific TOR, legal regulatory framework, and works case by case to obtain the highest value without regards to financial sustainability. There exist also many intractable barriers for PA co-management schemes with local communities, the private sector, and other stakeholders. In some countries, including Egypt, alternative institutional arrangements have been made (e.g. Building Operating Transfer (BOT) and Development Operating & Transport (DOT), resulting in significant increases in revenues. This is needed for PA’s where new regulatory arrangements should be developed and implemented.

Therefore, this project will develop a policy framework in a legal, policy and regulatory environment that includes clear roles, specifying operating arrangements with all stakeholders. This policy will also address legal and other barriers to co-management schemes with local communities, private sector and other stakeholders. This will require preparing legally revised and approved standard templates for concession contracts with the private sector, and clear guidance and procedures for bidding and selection. New types of PA management arrangements will be developed to increase the cost-effectiveness of PA management and associated government investments (e.g. tourism). This will require developing modalities for benefit-sharing, and improving existing informal institutional arrangements through decrees, agreements and other legally binding mechanisms.

The legal, policy and regulatory environment for alternative institutional arrangements will be improved through consultation with EEAA and its related departments (e.g. EPF and legal departments), and also meetings with other relevant governmental agencies (e.g. legislation department of the Ministry of Justice, National Centre for Land-use Planning, Ministries of Tourism, Agriculture and Land Reclamation, Local Development, and Finance), private sector, civil society and local communities. Once consultation with all stakeholders reaches consensus, legal arrangements will be made, documented, approved, and tested as pilot cases in some selected PAs.

Under the alternative institutional arrangements scenario, Egypt is expected to significantly enhance the effectiveness and sustainability of its PA system. The GEF intervention will energize NCS efforts to strengthen the national PA system. By seizing this opportunity, NCS can achieve the levels of financial, institutional, and human capacities needed to begin effectively conserving biodiversity within the substantial boundaries of Egypt’s PA system. The GEF intervention is providing an opportunity for NCS to obtain dramatic increases in baseline funding levels, while providing technical support to ensure that funds are spent effectively. According to the project’s median financial scenario, which projects forward over the ten-year period to be covered by the Ministerial Decree, the following results are obtainable:

  • From the first year of the project, the PA system can be considered as financially self-sufficient, i.e., it will generate greater revenues for EEAA that will be allocated from EEAA to the PA system.
  • By the end of year 4, the PA system will achieve its basic financing scenario.
  • By the end of the project (year 6), the PA system will reach 64% of total optimal scenario.
  • By the end of year 6, all PAs directly involved in the project will cover 100% of recurrent costs in relation to the optimal scenario.
  • By the end of year 6 at least 22% of total sources of income will be entirely new and would be independent of the tourism sector. Over ten years, the project will generate an estimated US$ 188 million in revenues.
  • The net present net value of this investment over the 10-year period is US$106 million, as compared with a total investment of US$19 million.
  • At the end of year 10, the PA system will achieve its ideal management scenario.
  • Governmental budget contribution will remain stable throughout the 10 years timeframe. It will decrease from 46% in year 1 to 16% at the end of the project. After 10 years, it will be 11% of the total sources of revenues.

It is essential to keep in mind that increased funding is a means to an end, the end in this case being a system of protected areas with systems of management that are capable of ensuring conservation of biodiversity, together with the benefits associated with sustainable use of natural resources. The alternative scenario therefore pays substantial attention to the importance of cost effective prioritized management and allocation of funds. While several factors will come into play in determining funds allocation among sites and objectives, biodiversity importance, as well as imminence and severity of threats, will be important among them. Biodiversity benefits expected to accrue through the project include enhanced viability for many of the estimated 93% of threatened species that are found in Egypt’s PAs.

Output 1.8. Well-defined staffing requirements, profiles and incentives at sites and system levels.

Capacity building is the key task for PA planners and managers who will create the necessary awareness, infrastructure and information base to ensure that existing funding for PAs is maintained, that opportunities are increased to seize new funding sources, and that policies governing resource use in other sectors of the economy do not inadvertently undermine the prospects for PAs. They must justify their funding requests in terms of socio-economic objectives. This argument needs to be stronger, due to the over-riding urgency of poverty reduction. Thus, building PAs capacity for financial and business planning is essential.

The current situation in NCS and PAs is that management skills and tools are not in place for effective use of existing planning resources. The PA system has limited human capital with background in economics, business, and financial planning.

Specialization and professional management of revenues of PA expenditure is affected by dysfunctional specific units (environmental, economic, sustainable finance) within the NCS system that should work toward integrated approaches to financial sustainability. Very limited incentives are in place to attract and retain quality personnel to complement existing capacities and competencies at central and site levels. NCS has difficulties getting approval for hiring individuals; as a result, it can take months and perhaps years to fill a vacant post.

This project will enhance the paper unit that already exists within the NCS system, by hiring high quality staff (4–7 specialized graduates) in management of revenue and PA expenditure. It is suggested that one staff will be placed at the Environmental Protection Fund (EPF), 3 at the NCS headquarters, and 3 at the selected PA’s (1st stage). Technical support, through national and international consultancies, will be provided to develop systems for remuneration, including performance evaluation, appraisal, and a reward and incentive structure for long-term and / or meritorious services. Technical support will also develop and institutionalize a system that links performance with incentives depending on PA performance and income generation. Sustainable finance teams will receive specific training to implement business plans and other related tools (e.g. documentation, innovative ideas, and best practices at PA’s system). Continuous learning programs will be developed, and be available at the web site of the project.